Exhibit 10.29.1
[EXECUTION COPY]
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "AGREEMENT") is made as of March 17,
2004 (the "EFFECTIVE DATE"), by and among Medtech/Denorex, LLC, a Delaware
limited liability company (the "COMPANY"), Medtech/Denorex Management, Inc., a
Delaware corporation ("EMPLOYER"), and Xxxxxxx Xxxxxxx ("EXECUTIVE"). Certain
provisions of this Agreement are intended for the benefit of, and will be
enforceable by, the Investors.
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase from the Company, and the Company will sell to
Executive, Common Units of the Company (the "COMMON UNITS"). Certain definitions
are set forth in SECTION 11 of this Agreement.
Employer desires to employ Executive and Executive desires to be employed
by Employer upon the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
PROVISIONS RELATING TO EXECUTIVE SECURITIES
1. PURCHASE AND SALE OF EXECUTIVE SECURITIES.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 197,615 Common Units at a price of $0.10 per unit for an
aggregate purchase price of $19,761.50. Upon the execution of this
Agreement, the Company will deliver to Executive copies of the certificates
representing such Executive Securities (as defined below), and Executive
will deliver to the Company a cashier's or certified check or wire transfer
of funds in an aggregate amount of $19,761.50.
(b) Within 30 days after the purchase of the Common Units hereunder,
Executive will make an effective election with the Internal Revenue Service
under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of EXHIBIT A attached hereto.
(c) All of the Common Units purchased hereunder are also referred to
herein as the "STANDARD CARRIED COMMON UNITS" (each individually, a
"STANDARD CARRIED COMMON UNIT").
(d) Until released upon the occurrence of a Sale of the Company or a
Public Offering as provided below, all certificates evidencing Executive
Securities shall remain held by the Company for the benefit of Executive
and the other holder(s) of Executive Securities, if any. Upon the
occurrence of a Sale of
the Company, the Company will return all certificates evidencing Executive
Securities to the record holders thereof. Upon the consummation of a Public
Offering, the Company will return to the record holders thereof
certificates evidencing the Vested Common Units.
(e) In connection with the purchase and sale of the Executive
Securities, Executive represents and warrants to the Company that:
(i) The Executive Securities to be purchased by Executive
pursuant to this Agreement will be acquired for Executive's own account and
not with a view to, or intention of, distribution thereof in violation of
the Securities Act, or any applicable state securities laws, and the
Executive Securities will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company and
Employer, is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Executive Securities.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Securities for an indefinite period of time
because the Executive Securities have not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration
is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Securities and has had full access to such other information
concerning the Company and its Subsidiaries as he has requested.
(v) Executive has full legal capacity to execute and
deliver this Agreement and to perform his obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of Executive,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement by Executive, to the best of his knowledge,
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject. This
representation is subject to SECTION 1(e)(vi) below.
(vi) Except as set forth on SCHEDULE 1(e)(vi) attached
hereto, Executive is neither party to, nor bound by, any other employment
agreement, consulting agreement, noncompete agreement, non-solicitation
agreement or confidentiality agreement.
(vii) Executive is a resident of the State of New Jersey.
(f) As an inducement to the Company to sell the Executive Securities
to Executive, and as a condition thereto, Executive acknowledges and agrees
that
2
neither the issuance of the Executive Securities to Executive nor any
provision contained herein shall entitle Executive to remain in the
employment of the Company, Employer or any of their respective Subsidiaries
or affect the right of the Company or Employer to terminate Executive's
employment at any time for any reason, subject to the remaining terms of
this Agreement and any other agreement between Executive and any such
parties.
2. VESTING OF COMMON UNITS.
(a) The Common Units (including the Standard Carried Common Units
which shall vest on a basis proportionate to the total number of Common
Units) shall be subject to vesting in the manner specified in this SECTION
2.
(b) Except as otherwise provided in this SECTION 2, the Common Units
shall become vested in accordance with the following schedule, if and only
if as of each such date provided below, Executive has been continuously
employed by the Company, Employer or any of their respective Subsidiaries
from the Effective Date through and including such date:
CUMULATIVE PERCENTAGE OF
DATE COMMON UNITS VESTED
------------------------------------ ----------------------------
First Anniversary of Effective Date 20.00%
Second Anniversary of Effective Date 40.00%
Third Anniversary of Effective Date 60.00%
Fourth Anniversary of Effective Date 80.00%
Fifth Anniversary of Effective Date 100.00%
(c) If Executive ceases to be employed by the Company, Employer and
their respective Subsidiaries on any date other than an anniversary date
specified in the schedule above, the cumulative percentage of Common Units
to become vested shall be determined on a PRO RATA basis according to the
number of days elapsed since the Effective Date, or the most recent
anniversary date, as the case may be.
(d) Upon the occurrence of a Sale of the Company, all Common Units
which have not yet become vested shall become vested at the time of the
consummation of the Sale of the Company, if, as of such time, Executive has
been continuously employed by the Company, Employer or any of their
respective Subsidiaries from the Effective Date through and including such
date.
(e) Common Units that have become vested are referred to herein as
"VESTED COMMON UNITS." Common Units that have not vested are referred to
herein as "UNVESTED COMMON UNITS."
3. REPURCHASE OPTIONS.
(a) SEPARATION REPURCHASE OPTION.
3
(i) Subject to the terms and conditions set forth in this
SECTION 3(a) and SECTION 5 below, the Company and the Equity Investors will
have the right to repurchase (the "SEPARATION REPURCHASE OPTION") from
Executive and his transferees (other than the Company and the Equity
Investors) all or any portion of (A) the Unvested Common Units, in the
event Executive ceases to be employed by the Company, Employer and their
respective Subsidiaries for any reason, and (B) the Vested Common Units, in
the event of Executive's (I) death, (II) Disability, (III) resignation
other than for Good Reason from Executive's employment with the Company,
Employer or any of their respective Subsidiaries, (IV) employment
termination with Cause by the Company, Employer or any of their respective
Subsidiaries or (V) employment termination when there is Substantial
Underperformance (each a "SEPARATION REPURCHASE EVENT"). The Separation
Repurchase Option with respect to Vested Common Units under SECTIONS
3(a)(i)(B)(I) and 3(a)(i)(B)(II) shall be valid only if Executive fails to
exercise his put rights, if any, under SECTION 4 below within the Put
Election Period provided in such SECTION 4(a). The Company may assign its
repurchase rights set forth in this SECTION 3(a) to any Person.
(ii) For any Separation Repurchase Option, (A) the purchase
price for each Unvested Common Unit will be the lesser of (I) Executive's
Original Cost for such unit and (II) the Fair Market Value of such unit as
of the date of the Separation Repurchase Event and (B) the purchase price
for each Vested Common Unit will be the Fair Market Value of such unit as
of the date of the Separation Repurchase Event; PROVIDED THAT, if
Executive's employment is terminated with Cause, the purchase price for
each Vested Common Unit will be the lesser of (I) Executive's Original Cost
for such unit and (II) the Fair Market Value of such unit as of the
effective date of Executive's termination with Cause.
(iii) The Company (with the approval of the Board) may elect
to purchase all or any portion of the Unvested Common Units and/or the
Vested Common Units by delivering written notice (the "SEPARATION
REPURCHASE NOTICE") to the holder or holders of such securities within
ninety (90) days after the Separation Repurchase Event. The Separation
Repurchase Notice will set forth the number of Unvested Common Units and
Vested Common Units to be acquired from each holder, the aggregate
consideration to be paid for such units and the time and place for the
closing of the transaction. The number of Executive Securities to be
repurchased by the Company shall first be satisfied to the extent possible
from the Executive Securities held by Executive at the time of delivery of
the Separation Repurchase Notice. If the number of Executive Securities
then held by Executive is less than the total number of Executive
Securities that the Company has elected to purchase, the Company shall
purchase the remaining Executive Securities elected to be purchased from
the Permitted Transferee(s) of Executive Securities under this Agreement,
PRO RATA according to the number of Executive Securities held by such
Permitted Transferee(s) at the time of delivery of such Separation
Repurchase Notice (determined as nearly as practicable to the nearest
unit). The number of Unvested Common Units and Vested Common Units to be
repurchased hereunder will be allocated among
4
Executive and the Permitted Transferee(s) of Executive Securities (if any)
PRO RATA according to the number of Executive Securities to be purchased
from such Person.
(iv) If for any reason the Company does not elect to
purchase all of the Executive Securities pursuant to the Separation
Repurchase Option, the Equity Investors shall be entitled to exercise the
Separation Repurchase Option for all or any portion of the Executive
Securities the Company has not elected to purchase (the "AVAILABLE
SEPARATION SECURITIES"). As soon as practicable after the Company has
determined that there will be Available Separation Securities, but in any
event within four months after the Separation Repurchase Event, the Company
shall give written notice (the "SEPARATION OPTION NOTICE") to the Equity
Investors setting forth the number of Available Separation Securities and
the purchase price for the Available Separation Securities. The Equity
Investors may elect to purchase any or all of the Available Securities by
giving written notice to the Company within 30 days after the Separation
Option Notice has been given by the Company. If the Equity Investors elect
to purchase an aggregate number greater than the number of Available
Separation Securities, the Available Separation Securities shall be
allocated among the Equity Investors based upon the number of Common Units
owned by each Equity Investor. As soon as practicable, and in any event
within ten days after the expiration of the 30-day period set forth above,
the Company shall notify each holder of Executive Securities under this
Agreement as to the number of units being purchased from such holder by the
Equity Investors (the "SUPPLEMENTAL SEPARATION REPURCHASE NOTICE"). At the
time the Company delivers the Supplemental Repurchase Notice to such
holder(s) of Executive Securities, the Company shall also deliver written
notice to each Equity Investor setting forth the number of units such
Equity Investor is entitled to purchase, the aggregate purchase price and
the time and place of the closing of the transaction.
(v) The closing of the purchase of the Executive Securities
pursuant to the Separation Repurchase Option shall take place on the date
designated by the Company in the Separation Repurchase Notice or
Supplemental Separation Repurchase Notice, which date shall not be more
than 30 days nor less than five days after the delivery of the later of
either such notice to be delivered. The Company will pay for the Executive
Securities to be purchased by it pursuant to the Separation Repurchase
Option by first offsetting amounts outstanding under any bona fide debts
owed by Executive to the Company and will pay the remainder of the purchase
price by, at its option, (A) a check or wire transfer of funds, (B) if the
purchase is being made by a corporate successor to the Company, the
issuance of a subordinated promissory note of such successor bearing
interest at a rate equal to the prime rate (as published in THE WALL STREET
JOURNAL from time to time) and having such maturity as the Company shall
determine in good faith, not to exceed three years, (C) issuing in exchange
for such securities a number of the Company's Class A Preferred Units
(having the rights and preferences set forth in the LLC Agreement) equal to
(I) the aggregate portion of the repurchase price for such Executive
Securities determined in accordance with this SECTION
5
3(a) paid by the issuance of Class A Preferred Units DIVIDED BY (II) 1,000,
and for purposes of the LLC Agreement each such Class A Preferred Unit
shall as of its issuance be deemed to have Capital Contributions (as
defined in the LLC Agreement) made with respect to such Class A Preferred
Unit equal to $1,000, or (D) any combination of clauses (A), (B) and (C) as
the Board may elect in its discretion. Each Equity Investor will pay for
the Executive Securities purchased by it by a check or wire transfer of
immediately available funds. The Company and the Equity Investors will be
entitled to receive customary representations and warranties from the
sellers regarding such sale and to require that all sellers' signatures be
guaranteed.
By way of example only for the purpose of clarifying the mechanics of
SECTION 3(a)(v)(C), if the Company intends to repurchase 10,000 Common
Units by issuance of Class A Preferred Units and the aggregate repurchase
price for such Common Units determined in accordance with this SECTION 3(a)
is $400,500, then the Company would issue to Executive 400.5 Class A
Preferred Units, and for purposes of the LLC Agreement each whole Class A
Preferred Unit issued to Executive would as of its issuance be deemed to
have Capital Contributions made for such Class A Preferred Unit of $1,000,
and the Capital Contributions made for the one-half Class A Preferred Unit
would be $500.
(vi) Notwithstanding anything to the contrary contained in
this Agreement, if the Fair Market Value of Executive Securities is finally
determined to be an amount at least 10% greater than the per unit
repurchase price for such unit of Executive Securities in the Separation
Repurchase Notice or in the Supplemental Separation Repurchase Notice, each
of the Company and the Equity Investors shall have the right to revoke its
exercise of the Separation Repurchase Option for all or any portion of the
Executive Securities elected to be repurchased by it by delivering notice
of such revocation in writing to the holders of Executive Securities during
the thirty-day period beginning on the date that the Company and/or the
Equity Investors are given written notice that the Fair Market Value of a
unit of Executive Securities was finally determined to be an amount at
least 10% greater than the per unit repurchase price for Executive
Securities set forth in the Separation Repurchase Notice or in the
Supplemental Separation Repurchase Notice.
(b) DILUTION REPURCHASE OPTION.
(i) Capitalized terms used in this SECTION 3(b) or
elsewhere in this Agreement but not otherwise defined herein shall have the
following meanings:
(A) "FOLLOW-ON PURCHASER EQUITY INVESTMENT" means an
investment as equity financing in the Company by one or more
Purchasers after the Effective Date pursuant to the Purchase
Agreement; PROVIDED THAT, in no event shall any investment as
equity financing by one or more Purchasers in connection with
the
6
consummation of the Prestige Transaction constitute a Follow-on
Purchaser Equity Investment for purposes of this Agreement.
(B) "FOLLOW-ON PURCHASER EQUITY INVESTMENT AMOUNT"
means, with respect to any Follow-on Purchaser Equity
Investment, the aggregate dollar amount of such Follow-on
Purchaser Equity Investment.
(C) "FULLY-DILUTED EQUITY" means, at any time of
determination, the then outstanding Equity Securities plus
(without duplication) all shares or units (or other
denominations) of Equity Securities issuable, whether at such
time or upon the passage of time or the occurrence of future
events, upon the exercise, conversion or exchange of all the
then outstanding Equity Equivalents.
(D) "MAXIMUM NUMBER OF REPURCHASABLE STANDARD CARRIED
COMMON UNITS" means with respect to any Follow-on Purchaser
Equity Investment, the product of the Maximum Percentage of
Repurchaseable Standard Carried Common Units MULTIPLIED BY the
number of Standard Carried Common Units owned by Executive
immediately prior to the Follow-on Purchaser Equity Investment.
(E) "MAXIMUM PERCENTAGE OF REPURCHASEABLE STANDARD
CARRIED COMMON UNITS" means, with respect to any Follow-on
Purchaser Equity Investment, the sum, expressed as a percentage
and rounded to the nearest one-hundredth of a percent, of the
Purchaser Equity Fund Dilution Percentage PLUS the Purchaser
Mezzanine Fund Dilution Percentage.
(F) "POST-MONEY EQUITY VALUE" means, with respect to
any Follow-on Purchaser Equity Investment, the sum of the
Pre-Money Equity Value PLUS the Follow-on Purchaser Equity
Investment Amount.
(G) "PRE-MONEY EQUITY VALUE" means, with respect to
any Follow-on Purchaser Equity Investment, the Fair Market
Value of the Fully-Diluted Equity of the Company immediately
prior to the Follow-on Purchaser Equity Investment.
(H) "PURCHASER EQUITY FUND DILUTION PERCENTAGE" means,
with respect to any Follow-on Purchaser Equity Investment, the
quotient, expressed as a percentage and rounded to the nearest
one-hundredth of a percent, equal to the Follow-on Purchaser
Equity Investment Amount divided by the Post-Money Equity
Value.
7
(I) "PURCHASER MEZZANINE FUND DILUTION FACTOR" means
5.53%.
(J) "PURCHASER MEZZANINE FUND DILUTION PERCENTAGE"
means, with respect to any Follow-on Purchaser Equity
Investment, the product, expressed as a percentage and rounded
to the nearest one-hundredth of a percent, of the Purchaser
Equity Fund Dilution Percentage MULTIPLIED BY the Purchaser
Mezzanine Fund Dilution Factor.
(ii) Subject to the terms and conditions set forth in this
SECTION 3(b), in the event of any Follow-on Purchaser Equity Investment,
the Investors will have the right to repurchase (the "DILUTION REPURCHASE
OPTION") from Executive and his transferees (including for this purpose the
Company and, with respect to any Standard Carried Common Units acquired
other than pursuant to the Dilution Repurchase Option, the Investors) all
or any portion of Executive's Maximum Number of Repurchasable Standard
Carried Common Units as of such Follow-on Purchaser Equity Investment.
(iii) For any Dilution Repurchase Option, the purchase price
for each Standard Carried Common Unit will be Executive's Original Cost for
such unit PLUS interest on such amount at a rate of 8% per annum from the
date hereof until the date of exercise of such Dilution Repurchase Option.
(iv) As soon as practicable after the Company has determined
the Maximum Number of Repurchasable Standard Carried Common Units, the
Company shall give written notice (the "DILUTION REPURCHASE OPTION NOTICE")
to the Investors setting forth the Maximum Number of Repurchasable Standard
Carried Common Units and the purchase price therefor. The Investors may
elect to purchase any or all of the Maximum Number of Repurchasable
Standard Carried Common Units by giving written notice to the Company
within 30 days after the Dilution Repurchase Option Notice has been given
by the Company. If the Investors elect to purchase an aggregate number
greater than the Maximum Number of Repurchasable Standard Carried Common
Units, the Maximum Number of Repurchasable Standard Carried Common Units
shall be allocated among the Investors based upon the number of Common
Units owned by each Investor. As soon as practicable, and in any event
within 10 days after the expiration of the 30-day period set forth above,
the Company shall notify each holder of the Standard Carried Common Units
as to the number of units being purchased from such holder by the
Investors, the aggregate consideration to be paid for such units and the
time and place for the closing of the transaction (the "DILUTION REPURCHASE
NOTICE"). At such time, the Company shall also deliver written notice to
each Investor setting forth the number of units such Investor is entitled
to purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
8
(v) The number of Standard Carried Common Units to be
repurchased by the Investors shall first be satisfied to the extent
possible from the Standard Carried Common Units held by Executive at the
time of delivery of the Dilution Repurchase Notice. If the number of
Standard Carried Common Units then held by Executive is less than the total
number of Standard Carried Common Units that the Investors have elected to
purchase, the Investors shall purchase the remaining Standard Carried
Common Units elected to be purchased from the Permitted Transferee(s) of
Executive Securities under this Agreement, PRO RATA according to the number
of Executive Securities held by such Permitted Transferee(s) at the time of
delivery of such Dilution Repurchase Notice (determined as nearly as
practicable to the nearest unit). The number of Standard Carried Common
Units, vested and unvested, to be repurchased hereunder shall be allocated
among Executive and the Permitted Transferee(s) of Executive Securities (if
any), PRO RATA according to the number of Standard Carried Common Units to
be purchased from such Person.
(vi) The closing of the purchase of the Standard Carried
Common Units pursuant to the Dilution Repurchase Option shall take place on
the date designated in the Dilution Repurchase Notice, which date shall not
be more than 30 days nor less than five days after the delivery of such
notice. Each Investor will pay for the Executive Securities to be purchased
by it pursuant to the Dilution Repurchase Option by a check or wire
transfer of immediately available funds. The Investors will be entitled to
receive customary representations and warranties from the sellers regarding
such sale and to require that all sellers' signatures be guaranteed.
4. PUT RIGHTS.
(a) SEPARATION PUT RIGHT. In the event Executive ceases to be employed
by the Company, Employer and their respective Subsidiaries as a result of
Executive's (A) death, (B) Disability, (C) employment termination by the
Company, Employer or any of their respective Subsidiaries without Cause
when there is not Substantial Underperformance or (D) resignation from his
employment for Good Reason when there is not Substantial Underperformance
(each a "SEPARATION PUT EVENT"), Executive may elect (the "SEPARATION PUT
ELECTION"), subject to and in accordance with the terms of this SECTION 4
and SECTION 5 below, to require the Company to purchase from Executive and
the other holders of Executive Securities under this Agreement all (but not
less than all) of the Vested Common Units held by Executive or such holders
by delivering written notice (the "SEPARATION PUT EXERCISE NOTICE") to the
Company before the expiration of the Put Election Period, specifying in
such Separation Put Exercise Notice the number and type of Vested Common
Units required to be purchased by the Company.
(b) REPURCHASE PRICE. For any Separation Put Election, the purchase
price for each Vested Common Unit will be the Fair Market Value of such
unit as of the Put Event Date.
9
(c) CLOSING PROCEDURES. The closing of the purchase of the Vested
Common Units pursuant to the Separation Put Election shall take place on a
date to be designated by the Company in the Company Separation Purchase
Price Notice, which date shall not be more than 30 days nor less than five
days after the Separation Put Exercise Notice is received by the Company.
The Company shall specify in writing to Executive the aggregate
consideration to be paid for such units and the time and place for the
closing of the transaction within five days after receipt of the Separation
Put Exercise Notice (the "COMPANY SEPARATION PURCHASE PRICE NOTICE"). The
Company will pay for the Vested Common Units to be purchased by it pursuant
to the Separation Put Election by first offsetting amounts outstanding
under any bona fide debts owed by Executive to the Company and will pay the
remainder of the purchase price by a check or wire transfer of immediately
available funds. The Company will be entitled to receive customary
representations and warranties from the sellers regarding such sale and to
require that all sellers' signatures be guaranteed.
(d) TERMINATION OF PUT RIGHTS. Notwithstanding anything herein to the
contrary, the purchase obligations of the Company pursuant to this SECTION
4 shall terminate if, prior to the consummation of such purchase
obligations, a Public Offering or a Sale of the Company occurs (such
termination effective as of the consummation of the Public Offering or Sale
of the Company, as the case may be).
5. LIMITATIONS ON CERTAIN REPURCHASES. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company pursuant to the Separation Repurchase Option or the Separation Put
Election shall be subject to the ability of the Company to pay the purchase
price from its readily available cash resources (without imposing any obligation
on the Company to raise financing to fund the repurchases) and also subject to
applicable restrictions contained in the
Delaware Limited Liability Company Act,
the
Delaware General Corporation Law or such other governing corporate or
limited liability company law, applicable federal and state securities laws, and
in the Company's and its Subsidiaries' debt and equity financing agreements. If
any such restrictions prohibit (A) the repurchase of Executive Securities
hereunder which the Company is otherwise entitled or required to make or (B)
dividends or other transfers of funds from one or more Subsidiaries to the
Company to enable such repurchases, then the Company may (in the case of the
Separation Repurchase Option), or shall (in the case of the Separation Put
Election), make such repurchases as soon as it is permitted to make repurchases
or receive funds from Subsidiaries under such restrictions. Furthermore, in the
event of a disagreement in accordance with the terms herein relating to the
determination of the Fair Market Value of any Executive Securities, the time
periods described herein with respect to purchases of Executive Securities under
SECTIONS 3 and 4 herein shall be tolled until any such determination has been
made in accordance with the terms provided herein.
10
6. RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
(a) TRANSFER OF EXECUTIVE SECURITIES. The holders of Executive
Securities shall not Transfer any interest in any units of Executive
Securities, except pursuant to (i) the provisions of SECTIONS 3 or 4
hereof, (ii) the provisions of Section 1 of the Securityholders Agreement
(a "PARTICIPATING SALE"), (iii) an Approved Sale (as defined in Section 4
of the Securityholders Agreement) or (iv) the provisions of SECTION 6(b)
below.
(b) CERTAIN PERMITTED TRANSFERS. The restrictions in this SECTION 6
will not apply with respect to any Transfer of (i) Executive Securities
made pursuant to applicable laws of descent and distribution or to such
Person's legal guardian in the case of any mental incapacity or among such
Person's Family Group or (ii) Common Units at such time as the Investors
sell Common Units in a Public Sale, but in the case of this clause (ii)
only an amount of units (the "TRANSFER AMOUNT") equal to the lesser of (A)
the number of Vested Common Units owned by Executive and (B) the result of
the number of Common Units owned by Executive multiplied by a fraction (the
"TRANSFER FRACTION"), the numerator of which is the number of Common Units
sold by the Investors in such Public Sale and the denominator of which is
the total number of Common Units held by the Investors prior to the Public
Sale; PROVIDED that, if at the time of a Public Sale of units by the
Investors, Executive chooses not to Transfer the Transfer Amount, Executive
shall retain the right to Transfer an amount of Common Units at a future
date equal to the lesser of (x) the number of Vested Common Units owned by
Executive at such future date and (y) the result of the number of Common
Units owned by Executive at such future date multiplied by the Transfer
Fraction; PROVIDED further that the restrictions contained in this SECTION
6 will continue to be applicable to the Executive Securities after any
Transfer of the type referred to in clause (i) above and the transferees of
such Executive Securities must agree in writing to be bound by the
provisions of this Agreement, the LLC Agreement, the Securityholders
Agreement and the Registration Agreement. Any transferee of Executive
Securities pursuant to a Transfer in accordance with the provisions of
clause (i) of this SECTION 6(b) is herein referred to as a "PERMITTED
TRANSFEREE." Upon the Transfer of Executive Securities pursuant to this
SECTION 6(b), the transferring holder of Executive Securities will deliver
a written notice (a "TRANSFER NOTICE") to the Company. In the case of a
Transfer pursuant to clause (i) hereof, the Transfer Notice will disclose
in reasonable detail the identity of the Permitted Transferee(s).
(c) TERMINATION OF RESTRICTIONS. The restrictions set forth in this
SECTION 6 will continue with respect to each unit of Executive Securities
until the earlier of (i) the date on which such unit of Executive
Securities has been transferred in a Public Sale permitted by this SECTION
6, or (ii) the consummation of a Sale of the Company.
11
7. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE SECURITIES.
(a) LEGEND. The certificates representing the Executive Securities
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF MARCH 17, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT
BETWEEN THE ISSUER AND AN EXECUTIVE OF THE COMPANY AND OTHER PARTIES,
DATED AS OF MARCH 17, 2004. A COPY OF SUCH AGREEMENT MAY BE OBTAINED
BY THE HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Securities may Transfer
any Executive Securities (except pursuant to SECTION 3, SECTION 4 or
SECTION 6(b) of this Agreement, Section 4 of the Securityholders Agreement
or an effective registration statement under the Securities Act) without
first delivering to the Company a written notice describing in reasonable
detail the proposed Transfer, together with an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the Securities Act and applicable
state securities laws is required in connection with such transfer. In
addition, if the holder of the Executive Securities delivers to the Company
an opinion of counsel that no subsequent Transfer of such Executive
Securities shall require registration under the Securities Act, the Company
shall promptly upon such contemplated Transfer deliver new certificates for
such Executive Securities that do not bear the Securities Act portion of
the legend set forth in SECTION 7(a). If the Company is not required to
deliver new certificates for such Executive Securities not bearing such
legend, the holder thereof shall not Transfer the same until the
prospective transferee has confirmed to the Company in writing its
agreement to be bound by the conditions contained in this SECTION 7.
PROVISIONS RELATING TO EMPLOYMENT
8. EMPLOYMENT. Employer agrees to employ Executive and Executive accepts
such employment for the period beginning as of the date hereof and ending upon
his separation pursuant to SECTION 8(c) hereof (the "EMPLOYMENT PERIOD").
(a) POSITION AND DUTIES.
12
(i) During the Employment Period, Executive shall serve as
the Senior Vice President - Marketing Household Products of Employer and
shall have the normal duties, responsibilities and authority implied by
such position, subject to the power of the Chief Executive Officer of
Employer and the Board to expand or limit such duties, responsibilities and
authority and to override such actions.
(ii) Executive shall report to the Chief Executive Officer
of Employer, and Executive shall devote his best efforts and his full
business time and attention to the business and affairs of the Company,
Employer and their Subsidiaries.
(b) SALARY, BONUS AND BENEFITS. During the Employment Period, Employer
will pay Executive a base salary of $188,000 per annum (the "ANNUAL BASE
SALARY"). The existing Medtech/Denorex bonus program will continue through
the fiscal year ending March 31, 2004. Beginning with fiscal year 2005, the
Board shall develop a new bonus program which may incorporate subjective
and objective criteria for bonus achievement different from the criteria
contained in the existing Medtech/Denorex bonus program; PROVIDED, HOWEVER,
THAT the maximum bonus payment potentials to Executive will not be
decreased from those provided in the existing Medtech/Denorex bonus
program. In addition, during the Employment Period, Executive will be
entitled to such other benefits approved by the Board and made available to
the senior management of the Company, Employer and their Subsidiaries,
which shall include vacation time (in an amount consistent with past
practice) and medical, dental, life and disability insurance. Following the
completion of the fiscal year ending March 31, 2005, the Board, on a basis
consistent with past practice, shall review the Annual Base Salary of
Executive and may increase the Annual Base Salary by such amount as the
Board, in its sole discretion, shall deem appropriate. The term "Annual
Base Salary" as used in this Agreement shall refer to the Annual Base
Salary as it may be so increased.
(c) SEPARATION. The Employment Period will continue until (i)
Executive's death, Disability or resignation from employment with the
Company, Employer and their respective Subsidiaries or (ii) the Company,
Employer and their respective Subsidiaries decide to terminate Executive's
employment with or without Cause. If (A) Executive's employment is
terminated without Cause pursuant to clause (ii) above or (B) Executive
resigns from employment with the Company, Employer or any of their
respective Subsidiaries for Good Reason, then during the period commencing
on the date of termination of the Employment Period and ending on the first
anniversary of the date of termination (the "SEVERANCE PERIOD"), Employer
shall pay to Executive, in equal installments on the Employer's regular
salary payment dates, an aggregate amount equal to (I) his Annual Base
Salary, PLUS (II) an amount equal to the annual bonus, if any, paid or
payable to Executive by Employer for the last fiscal year ended prior to
the date of termination. In addition, if Executive is entitled on the date
of termination to coverage under the medical and prescription portions of
the Welfare Plans, such
13
coverage shall continue for Executive and Executive's covered dependents
for a period ending on the first anniversary of the date of termination at
the active employee cost payable by Executive with respect to those costs
paid by Executive prior to the date of termination; PROVIDED, that this
coverage will count towards the depletion of any continued health care
coverage rights that Executive and Executive's dependents may have pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"); PROVIDED further, that Executive's or Executive's covered
dependents' rights to continued health care coverage pursuant to this
SECTION 8(c) shall terminate at the time Executive or Executive's covered
dependents become covered, as described in COBRA, under another group
health plan, and shall also terminate as of the date Employer ceases to
provide coverage to its senior executives generally under any such Welfare
Plan. Notwithstanding the foregoing, (I) Executive shall not be entitled to
receive any payments or benefits pursuant to this SECTION 8(c) unless
Executive has executed and delivered to Employer a general release in form
and substance satisfactory to Employer and (II) Executive shall be entitled
to receive such payments and benefits only so long as Executive has not
breached the provisions of SECTIONS 9 or 10 hereof. The release described
in the foregoing sentence shall not require Executive to release any claims
for any vested employee benefits, workers compensation benefits covered by
insurance or self-insurance, claims to indemnification to which Executive
may be entitled under the Company's or its Subsidiaries' certificate(s) of
incorporation, by-laws or under any of the Company's or its Subsidiaries'
directors or officers insurance policy(ies) or applicable law, or equity
claims to contribution from the Company or its Subsidiaries or any other
Person to which Executive is entitled as a matter of law in respect of any
claim made against Executive for an alleged act or omission in Executive's
official capacity and within the scope of Executive's duties as an officer,
director or employee of the Company or its Subsidiaries. Not later than
eighteen (18) months following the termination of Executive's employment,
the Company and its Subsidiaries for which the Executive has acted in the
capacity of a senior manager, shall sign and deliver to Executive a release
of claims that the Company or its Subsidiaries has against Executive;
PROVIDED THAT, such release shall not release any claims that the Company
or its Subsidiaries commenced prior to the date of the release(s), any
claims relating to matters actively concealed by Executive, any claims to
contribution from Executive to which the Company or its Subsidiaries are
entitled as a matter of law or any claims arising out of mistaken
indemnification by the Company or any of its Subsidiaries. Except as
otherwise provided in this SECTION 8(c) or in the Employer's employee
benefit plans or as otherwise required by applicable law, Executive shall
not be entitled to any other salary, compensation or benefits after
termination of Executive's employment with Employer.
9. CONFIDENTIAL INFORMATION.
(a) OBLIGATION TO MAINTAIN CONFIDENTIALITY. Executive acknowledges
that the information, observations and data (including trade secrets)
obtained by him during the course of his performance under this Agreement
concerning the
14
business or affairs of the Company, Employer and their respective
Subsidiaries and Affiliates ("CONFIDENTIAL INFORMATION") are the property
of the Company, Employer or such Subsidiaries and Affiliates, including
information concerning acquisition opportunities in or reasonably related
to the Company's and Employer's business or industry of which Executive
becomes aware during the Employment Period. Therefore, Executive agrees
that he will not disclose to any unauthorized Person or use for his own
account (for his commercial advantage or otherwise) any Confidential
Information without the Board's written consent, unless and to the extent
that the Confidential Information, (i) becomes generally known to and
available for use by the public other than as a result of Executive's acts
or omissions to act, (ii) was known to Executive prior to Executive's
employment with Employer, the Company or any of their Subsidiaries and
Affiliates or (iii) is required to be disclosed pursuant to any applicable
law, court order or other governmental decree. Executive shall deliver to
the Company at a Separation, or at any other time the Company may request,
all memoranda, notes, plans, records, reports, computer tapes, printouts
and software and other documents and data (and copies thereof) relating to
the Confidential Information, Work Product (as defined below) or the
business of the Company, Employer and their respective Subsidiaries and
Affiliates (including, without limitation, all acquisition prospects, lists
and contact information) which he may then possess or have under his
control.
(b) OWNERSHIP OF PROPERTY. Executive acknowledges that all
discoveries, concepts, ideas, inventions, innovations, improvements,
developments, methods, processes, programs, designs, analyses, drawings,
reports, patent applications, copyrightable work and mask work (whether or
not including any Confidential Information) and all registrations or
applications related thereto, all other proprietary information and all
similar or related information (whether or not patentable) that relate to
the Company's, Employer's or any of their respective Subsidiaries' or
Affiliates' actual or anticipated business, research and development, or
existing or future products or services and that are conceived, developed,
contributed to, made, or reduced to practice by Executive (either solely or
jointly with others) while employed by the Company, Employer or any of
their respective Subsidiaries or Affiliates (including any of the foregoing
that constitutes any proprietary information or records) ("WORK PRODUCT")
belong to the Company, Employer or such Subsidiary or Affiliate and
Executive hereby assigns, and agrees to assign, all of the above Work
Product to the Company, Employer or to such Subsidiary or Affiliate. Any
copyrightable work prepared in whole or in part by Executive in the course
of his work for any of the foregoing entities shall be deemed a "work made
for hire" under the copyright laws, and the Company, Employer or such
Subsidiary or Affiliate shall own all rights therein. To the extent that
any such copyrightable work is not a "work made for hire," Executive hereby
assigns and agrees to assign to the Company, Employer or such Subsidiary or
Affiliate all right, title, and interest, including without limitation,
copyright in and to such copyrightable work. Executive shall promptly
disclose such Work Product and copyrightable work to the Board and perform
all actions reasonably requested by the Board (whether during or after the
Employment
15
Period) to establish and confirm the Company's, Employer's or such
Subsidiary's or Affiliate's ownership (including, without limitation,
assignments, consents, powers of attorney, and other instruments).
(c) THIRD PARTY INFORMATION. Executive understands that the Company,
Employer and their respective Subsidiaries and Affiliates will receive from
third parties confidential or proprietary information ("THIRD PARTY
INFORMATION") subject to a duty on the Company's, Employer's and their
respective Subsidiaries' and Affiliates' part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. During the Employment Period and thereafter, and without in any
way limiting the provisions of SECTION 9(a) above, Executive will hold
Third Party Information in the strictest confidence and will not disclose
to anyone (other than personnel and consultants of the Company, Employer or
their respective Subsidiaries and Affiliates who need to know such
information in connection with their work for the Company, Employer or any
of their respective Subsidiaries and Affiliates) or use, except in
connection with his work for the Company, Employer or any of their
respective Subsidiaries and Affiliates, Third Party Information unless
expressly authorized by a member of the Board (other than himself if
Executive is on the Board) in writing.
(d) USE OF INFORMATION OF PRIOR EMPLOYERS. During the Employment
Period and thereafter, Executive will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employers
or any other Person to whom Executive has an obligation of confidentiality,
and will not bring onto the premises of the Company, Employer or any of
their respective Subsidiaries or Affiliates any unpublished documents or
any property belonging to any former employer or any other Person to whom
Executive has an obligation of confidentiality unless consented to in
writing by the former employer or Person. Executive will use in the
performance of his duties only information which is (i) generally known and
used by persons with training and experience comparable to Executive's and
which is (x) common knowledge in the industry or (y) otherwise legally in
the public domain, (ii) otherwise provided or developed by the Company,
Employer or any of their respective Subsidiaries or Affiliates or (iii) in
the case of materials, property or information belonging to any former
employer or other Person to whom Executive has an obligation of
confidentiality, approved for such use in writing by such former employer
or Person.
10. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges that in the
course of his employment with Employer he will become familiar with the
Company's, Employer's and their respective Subsidiaries' trade secrets and with
other confidential information concerning the Company, Employer and such
Subsidiaries and that his services will be of special, unique and extraordinary
value to the Company, Employer and such Subsidiaries. Therefore, Executive
agrees that:
(a) NONCOMPETITION. During the Employment Period and also during the
period commencing on the date of termination of the Employment Period and
ending on the first anniversary of the date of termination, he shall not
anywhere in
16
the United States, directly or indirectly, own, manage, control,
participate in, consult with, render services for, or in any manner engage
in any business (i) competing with a brand of the Company, Employer,
Medtech, Denorex, Spic and Span, any business acquired by such Persons, or
any Subsidiaries of such Persons, representing 10% or more of the
consolidated revenues or EBITDA of the Company and its Subsidiaries for the
trailing 12 months ending on the last day of the last completed calendar
month immediately preceding the date of termination of the Employment
Period or (ii) in which the Company, Employer Medtech, Denorex, Spic and
Span, any business acquired by such Persons, or any Subsidiaries of such
Persons has conducted discussions or has requested and received information
relating to the acquisition of such business by such Person (x) within one
year prior to the Separation and (y) during the Severance Period, if any.
Nothing herein shall prohibit Executive from being a passive owner of not
more than 2% of the outstanding stock of any class of a corporation that is
publicly traded, so long as Executive has no active participation in the
business of such corporation.
(b) NONSOLICITATION. During the Employment Period and also during the
period commencing on the date of termination of the Employment Period and
ending on the first anniversary of the date of termination, Executive shall
not directly or indirectly through another entity (i) induce or attempt to
induce any employee of the Company, Employer or any of their respective
Subsidiaries to leave the employ of the Company, Employer or any such
Subsidiary, or in any way interfere with the relationship between the
Company, Employer and any of their respective Subsidiaries and any employee
thereof, (ii) hire any person who was an employee of the Company, Employer
or any of their respective Subsidiaries within 180 days after such person
ceased to be an employee of the Company, Employer or any of their
respective Subsidiaries (PROVIDED, HOWEVER, THAT such restriction shall not
apply for a particular employee if the Company has provided its written
consent to such hire, which consent, in the case of any person who was not
a key employee of the Company, Employer or any of their respective
Subsidiaries, shall not be unreasonably withheld), (iii) induce or attempt
to induce any customer, supplier, licensee or other business relation of
the Company, Employer or any of their respective Subsidiaries to cease
doing business with the Company, Employer or any such Subsidiary or in any
way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company, Employer or any Subsidiary
or (iv) directly or indirectly acquire or attempt to acquire an interest in
any business relating to the business of the Company, Employer or any of
their respective Subsidiaries and with which the Company, Employer and any
of their respective Subsidiaries has conducted discussions or has requested
and received information relating to the acquisition of such business by
the Company, Employer or any of their respective Subsidiaries in the two
year period immediately preceding a Separation.
(c) ENFORCEMENT. If, at the time of enforcement of SECTION 9 or this
SECTION 10, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree
that the maximum duration,
17
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall
be allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Executive's services are
unique and because Executive has access to Confidential Information, the
parties hereto agree that money damages would be an inadequate remedy for
any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of this Agreement, the Company, Employer, their
respective Subsidiaries or their successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions
hereof (without posting a bond or other security).
(d) ADDITIONAL ACKNOWLEDGMENTS. Executive acknowledges that the
provisions of this SECTION 10 are in consideration of: (i) employment with
the Employer, (ii) the issuance of the Executive Securities by the Company
and (iii) additional good and valuable consideration as set forth in this
Agreement. In addition, Executive agrees and acknowledges that the
restrictions contained in SECTION 9 and this SECTION 10 do not preclude
Executive from earning a livelihood, nor do they unreasonably impose
limitations on Executive's ability to earn a living. In addition, Executive
acknowledges (i) that the business of the Company, Employer and their
respective Subsidiaries will be conducted throughout the United States,
(ii) notwithstanding the state of incorporation or principal office of the
Company, Employer or any of their respective Subsidiaries, or any of their
respective executives or employees (including the Executive), it is
expected that the Company and Employer will have business activities and
have valuable business relationships within its industry throughout the
United States and (iii) as part of his responsibilities, Executive will be
traveling throughout the United States in furtherance of Employer's
business and its relationships. Executive agrees and acknowledges that the
potential harm to the Company and Employer of the non-enforcement of
SECTION 9 and this SECTION 10 outweighs any potential harm to Executive of
its enforcement by injunction or otherwise. Executive acknowledges that he
has carefully read this Agreement and has given careful consideration to
the restraints imposed upon Executive by this Agreement, and is in full
accord as to their necessity for the reasonable and proper protection of
confidential and proprietary information of the Company, Employer and their
Subsidiaries now existing or to be developed in the future. Executive
expressly acknowledges and agrees that each and every restraint imposed by
this Agreement is reasonable with respect to subject matter, time period
and geographical area.
GENERAL PROVISIONS
11. DEFINITIONS.
"AFFILIATE" means, (i) with respect to any Person, any Person that
controls, is controlled by or is under common control with such Person or an
Affiliate of such Person, and (ii) with respect to any Investor, any general or
limited partner of such
18
Investor, any employee or owner of any such partner, or any other Person
controlling, controlled by or under common control with such Investor.
"BOARD" means the Company's board of managers (or its equivalent).
"CAUSE" means (i) the intentional or knowing commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company, Employer or any of
their respective Subsidiaries or any of their customers or suppliers, (ii)
substantial and repeated failure to perform duties of the office held by
Executive as reasonably directed by the Chief Executive Officer of Employer
and/or the Board, (iii) gross negligence or willful misconduct with respect to
the Company, Employer or any of their respective Subsidiaries, (iv) conduct
tending to bring the Company, Employer or any of their respective Subsidiaries
into substantial public disgrace or disrepute or (v) any breach by Executive of
SECTIONS 9 or 10 of this Agreement. Notwithstanding the foregoing, if it is
alleged or determined that actions taken by Executive caused the Company,
Employer or any of their respective Subsidiaries to engage in illegal activities
or operations, the taking of such actions by Executive shall not constitute
"Cause" hereunder if Executive had a reasonable and good faith belief that such
actions were not in violation of any law, rule, regulation or court order, were
in the best interests of the Company, Employer and their respective Subsidiaries
and were taken in the ordinary course of business.
"CLASS A PREFERRED UNITS" means the Class A Preferred Units, as defined in
the LLC Agreement.
"CLASS B PREFERRED UNITS" means the Class B Preferred Units, as defined in
the LLC Agreement.
"CREDIT AGREEMENT" means that certain Credit Agreement dated as February 6,
2004, by and among Medtech Acquisition, Inc., Denorex Acquisition, Inc., Xxxxxxx
Xxxxx Capital, a division of Xxxxxxx Xxxxx Business Financial Services Inc., the
financial institutions parties thereto and the other parties named therein, as
the same may be amended, supplemented or otherwise modified from time to time,
at any renewal, extension, refunding, restructuring, replacement or refinancing
thereof (whether with the original agent or lenders or another agent or agents
or other lenders and whether provided under the original Credit Agreement or any
other credit agreement).
"DEBT" has the meaning set forth in the Credit Agreement.
"DENOREX" means The Denorex Company, a
Delaware corporation.
"DISABILITY" means the disability of Executive caused by any physical or
mental injury, illness or incapacity as a result of which Executive is unable to
effectively perform the essential functions of Executive's duties as determined
by the Board in good faith.
"EBITDA" has the meaning set forth in the Credit Agreement.
19
"EQUITY EQUIVALENTS" means, at any time, without duplication with any other
Equity Securities or Equity Equivalents, any rights, warrants, options,
convertible securities or Debt, exchangeable securities or Debt, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Equity Securities and securities convertible or exchangeable into
Equity Securities, whether at the time of issuance or upon the passage of time
or the occurrence of a future event.
"EQUITY INVESTOR" means any of GTCR Fund VIII, GTCR Fund VIII/B, GTCR
Co-Invest or the TCW/Crescent Purchasers (collectively, the "EQUITY INVESTORS").
"EQUITY SECURITIES" means all shares or units of Common Units, Class A
Preferred Units, Class B Preferred Units and other Units (as defined in the LLC
Agreement) or other equity interests in the Company (including other classes or
series thereof having different rights) as may be authorized for issuance by the
Company from time to time. Equity Securities will also include equity of the
Company (or a corporate successor to the Company or a Subsidiary of the Company)
issued with respect to Equity Securities (i) by way of a unit split, unit
dividend, conversion, or other recapitalization, (ii) by way of reorganization
or recapitalization of the Company in connection with the incorporation of a
corporate successor in accordance with Section 15.7 of the LLC Agreement, or
(iii) by way of a distribution of securities of a Subsidiary of the Company to
the members of the Company following or with respect to a Subsidiary Public
Offering.
"EXECUTIVE SECURITIES" means all Common Units acquired by Executive
hereunder. Executive Securities will continue to be Executive Securities in the
hands of any holder other than Executive (except for the Company, the Investors
and transferees in a Public Sale, which transferees, other than as provided in
SECTION 3(b)(ii) above, shall not be subject to the provisions of this Agreement
with respect to such securities), and except as otherwise provided herein, each
such other holder of Executive Securities will succeed to all rights and
obligations attributable to Executive as a holder of Executive Securities
hereunder. Executive Securities (or, individually, any particular type of equity
security included therein) will also include equity securities of the Company
(or a corporate successor to the Company or a Subsidiary of the Company) issued
with respect to Executive Securities (or, individually, any particular type of
equity security included therein) (i) by way of a unit split, unit dividend,
conversion, or other recapitalization, (ii) by way of reorganization or
recapitalization of the Company in connection with the incorporation of a
corporate successor in accordance with Section 15.7 of the LLC Agreement or
(iii) by way of a distribution of securities of a Subsidiary of the Company to
the members of the Company following or with respect to a Subsidiary Public
Offering. For the avoidance of doubt, all Unvested Common Units shall remain
Unvested Common Units after a Transfer thereof, unless such Transfer is to the
Company, an Investor or a transferee in a Public Sale.
"FAIR MARKET VALUE" of each unit of Executive Securities or other Equity
Securities, as the case may be (as applicable, the "APPLICABLE SECURITIES"),
means the average of the closing prices of the sales of such Applicable
Securities on all securities exchanges on which such Applicable Securities may
at the time be listed, or, if there have been no sales on any such exchange on
any day, the average of the highest bid and lowest
20
asked prices on all such exchanges at the end of such day, or, if on any day
such Applicable Securities are not so listed, the average of the representative
bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time,
or, if on any day such Applicable Securities are not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If at any time such Applicable Securities are not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Fair Market Value will be the fair value of such Applicable
Securities as determined in good faith by the Board. If Executive reasonably
disagrees with such determination, Executive shall deliver to the Board a
written notice of objection (an "OBJECTION") within thirty (30) days after
delivery of the Separation Repurchase Notice (or if no Separation Repurchase
Notice is delivered, then within thirty (30) days after delivery of the
Supplemental Separation Repurchase Notice), the Dilution Repurchase Notice or
the Company Separation Purchase Price Notice, as applicable. Upon receipt of
Executive's Objection, the Board and Executive will negotiate in good faith to
agree on such Fair Market Value. If such agreement is not reached within 20 days
after the delivery of the Objection, Fair Market Value shall be determined by an
appraiser jointly selected by the Board and Executive, which appraiser shall
submit to the Board and Executive a report within 30 days of its engagement
setting forth such determination. If the parties are unable to agree on an
appraiser within 25 days after delivery of the Objection, within seven days,
each party shall submit the names of four nationally recognized firms that are
engaged in the business of valuing non-public securities, and each party shall
be entitled to strike two names from the other party's list of firms, and the
appraiser shall be selected by lot from the remaining four investment banking
firms. The expenses of such appraiser shall be borne equally by Executive and
the Company. The determination of such appraiser as to Fair Market Value shall
be final and binding upon all parties.
"FAMILY GROUP" means a Person's spouse and descendants (whether natural or
adopted), and any trust, family limited partnership, limited liability company
or other entity wholly owned, directly or indirectly, by such Person or such
Person's spouse and/or descendants that is and remains solely for the benefit of
such Person and/or such Person's spouse and/or descendants and any retirement
plan for such Person.
"GOOD REASON" means (i) any material diminution in Executive's position,
title, authority, powers, functions, duties or responsibilities with Employer,
(ii) the permanent relocation or transfer of Employer's principal office outside
a 30 mile radius from Irvington, New York or (iii) any failure of Employer to
comply with the Annual Base Salary and bonus provisions of SECTION 8(b) hereof;
PROVIDED, HOWEVER, that either or both of clauses (i) or (ii) above shall be
disregarded for purposes of this definition if Xxxxx Xxxx, as the Chief
Executive Officer of the Employer, consents to the circumstances described in
such clause(s).
"GTCR CAPITAL PARTNERS" means GTCR Capital Partners, L.P., a
Delaware
limited partnership.
21
"GTCR CO-INVEST" means GTCR Co-Invest II, L.P., a
Delaware limited
partnership.
"GTCR FUND VIII" means GTCR Fund VIII, L.P., a
Delaware limited
partnership.
"GTCR FUND VIII/B" means GTCR Fund VIII/B, L.P., a
Delaware limited
partnership.
"INVESTOR" means any Equity Investor, GTCR Capital Partners or the
TCW/Crescent Lenders (collectively, the "INVESTORS").
"LLC AGREEMENT" means the Second Amended and Restated Limited Liability
Company Agreement of the Company, dated as of March 5, 2004, as amended from
time to time pursuant to its terms.
"MEDTECH" means Medtech Holdings, Inc., a
Delaware corporation.
"ORIGINAL COST" means, with respect to each Common Unit purchased
hereunder, $0.10 (as proportionately adjusted for all subsequent unit splits,
unit dividends and other recapitalizations).
"PERSON" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, investment fund, any other business entity and a
governmental entity or any department, agency or political subdivision thereof.
"PRESTIGE TRANSACTION" means the transactions contemplated by that certain
Agreement of Merger, dated as of February 10, 2004, by and among Prestige
Acquisition Holdings, LLC, Prestige MergerSub, Inc, and Xxxxxx Bay Holdings,
Inc.
"PRO FORMA EBITDA" means, for each month during the applicable period, an
amount equal to (i) with respect to fiscal years 2004 through 2008, the monthly
EBITDA projections set forth on EXHIBIT B attached hereto, and (ii) with respect
to each fiscal year following fiscal year 2008, the monthly EBITDA projections
prepared by or on behalf of management of the Company and approved by the Board
or a committee thereof, as such EBITDA projections under clauses (i) and (ii)
above may subsequently be adjusted, with the approval of the Board, to reflect
subsequent acquisitions or dispositions of businesses or other events,
circumstances or occurrences that affect such projections. If EBITDA projections
are determined on an annual (and not a monthly) basis for any fiscal year, then
monthly EBITDA projections for each month during such fiscal year shall equal
the quotient of the annual EBITDA projection for such fiscal year divided by 12.
"PUBLIC OFFERING" means the sale in an underwritten public offering
registered under the Securities Act of equity securities of the Company or a
corporate successor to the Company.
22
"PUBLIC SALE" means (i) any sale pursuant to a registered public offering
under the Securities Act or (ii) any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker (other than pursuant to Rule 144(k) prior to a Public Offering).
"PURCHASE AGREEMENT" means the Unit Purchase Agreement dated as of February
6, 2004, among the Company, GTCR Fund VIII, GTCR Fund VIII/B, GTCR Co-Invest and
the TCW/Crescent Purchasers, as amended from time to time pursuant to its terms.
"PURCHASER" has the meaning set forth in the Purchase Agreement.
"PUT ELECTION PERIOD" means the period of time commencing on the date on
which the Separation Put Event occurs and expiring at 5:00 p.m., Chicago,
Illinois time, on the 20th business day thereafter for all Separation Put Events
other than death and Disability. If the Separation Put Event is triggered by the
Executive's death or Disability, the Put Election Period will be extended to 45
business days.
"PUT EVENT DATE" means the date on which a Separation Put Event occurs.
"REGISTRATION AGREEMENT" means the Registration Rights Agreement, dated as
of February 6, 2004, by and among the Company and certain of its
securityholders, as amended from time to time pursuant to its terms.
"SALE OF THE COMPANY" means any transaction or series of transactions
pursuant to which any Person or group of related Persons other than the
Investors or their Affiliates in the aggregate acquire(s) (i) equity securities
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Board (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's equity, securityholder or voting
agreement, proxy, power of attorney or otherwise) or (ii) all or substantially
all of the Company's assets determined on a consolidated basis; PROVIDED that a
Public Offering shall not constitute a Sale of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITYHOLDERS AGREEMENT" means the Securityholders Agreement, dated as
of February 6, 2004, among the Company and certain of its securityholders, as
amended from time to time pursuant to its terms.
"SEPARATION" means the cessation of employment of Executive with the
Company, Employer and their respective Subsidiaries for any reason.
"SPIC AND SPAN" means The Spic and Span Company, a Delaware corporation.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees
23
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a limited liability company, partnership, association, or
other business entity (other than a corporation), a majority of partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association, or other business entity (other than a corporation) if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association, or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association, or other business entity. For
purposes hereof, references to a "SUBSIDIARY" of any Person shall be given
effect only at such times that such Person has one or more Subsidiaries, and,
unless otherwise indicated, the term "Subsidiary" refers to a Subsidiary of the
Company.
"SUBSIDIARY PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of equity securities of Employer or
another Subsidiary of the Company.
"SUBSTANTIAL UNDERPERFORMANCE" means the occurrence or existence of either
or both of the following: (i) at any time during the 12-month period ending on
and including the date of termination of the Employment Period (A) a default,
whether or not cured, caused by the failure to make any Material Payment of any
Debt (unless a clerical error caused such failure and such failure was cured
immediately upon discovery), (B) any other material event of default (after
giving effect to any applicable grace period) relating to any Material Debt the
effect of which default is to cause, or to permit the holder or holders of such
Material Debt (or a trustee or agent on behalf of such holder or holders) to
cause, any such Material Debt to become due prior to its stated maturity
(without regard to any subordination provisions relating thereto) or (C) any
Material Debt shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof or (ii) as of the date of the termination of the Employment
Period, EBITDA for the 12-month period ending on the last day of the last
completed calendar month immediately preceding the date of the termination of
the Employment Period equals an amount less than 85% of aggregate Pro Forma
EBITDA for the same 12-month period. For purposes of this definition, "Debt"
shall mean, as of any date of determination, any Debt of the Company, Employer
or any of their respective Subsidiaries; "Material Payment" shall mean any
payment equal to or greater than $100,000; and "Material Debt" shall mean any
Debt having an outstanding principal balance in excess of $3 million.
"TCW/CRESCENT LENDERS" means collectively, TCW/Crescent Mezzanine Partners
III, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust III, a
Delaware business trust, and TCW/Crescent Mezzanine Partners III Netherlands,
L.P., a Delaware limited partnership, any of their Affiliates or any investment
fund for whom Trust Company of the West or any Affiliate of Trust Company of the
West acts as an account manager.
24
"TCW/CRESCENT PURCHASERS" means collectively, TCW/Crescent Mezzanine
Partners III, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust
III, a Delaware business trust, and TCW/Crescent Mezzanine Partners III
Netherlands, L.P., a Delaware limited partnership, any of their Affiliates or
any investment fund for whom Trust Company of the West or any Affiliate of Trust
Company of the West acts as an account manager.
"TRANSFER" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
"WELFARE PLANS" mean the welfare benefit plans, practices, policies and
programs provided by Employer to the extent applicable generally to other senior
executives of the Company.
12. NOTICES. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
IF TO EMPLOYER:
Medtech/Denorex Management, Inc.
00 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
WITH COPIES TO:
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, P.C. and Xxxxxxxxxxx X. Xxxxxx
IF TO THE COMPANY:
Medtech/Denorex, LLC
00 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
WITH COPIES TO:
25
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, P.C. and Xxxxxxxxxxx X. Xxxxxx
IF TO EXECUTIVE:
00 Xxxxx Xxxx Xxx
Xxxxx, Xxx Xxxxxx 00000
WITH A COPY TO:
Ford Xxxxxx Xxxxxxxx Xxxxxxxx & Gleser LLP
Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
IF TO THE INVESTORS:
See the attached INVESTOR NOTICE SCHEDULE.
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
13. GENERAL PROVISIONS.
(a) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Executive Securities as
the owner of such equity for any purpose.
(b) SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
26
(c) COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way (including any offer of employment previously entered
into between Spic and Span and Executive).
(d) JOINDER TO EQUITY DOCUMENTS. Simultaneous to the execution of this
Agreement, Executive shall sign a counterpart signature page to each of the
LLC Agreement, Securityholders Agreement and Registration Agreement,
thereby agreeing to be bound by the restrictions and entitled to the rights
set forth therein. Executive represents to the Company that he has had an
opportunity to ask questions concerning the terms and conditions of each
agreement referenced in the preceding sentence.
(e) NO STRICT CONSTRUCTION. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
any party.
(f) COUNTERPARTS. This Agreement may be executed and delivered in
separate counterparts (including by means of facsimile), each of which is
deemed to be an original and all of which taken together constitute one and
the same agreement.
(g) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Securities); PROVIDED
THAT the rights and obligations of Executive under this Agreement shall not
be assignable except in connection with a permitted transfer of Executive
Securities hereunder.
(h) CHOICE OF LAW. The law of the State of Delaware will govern all
questions concerning the relative rights of the Company, Employer and its
securityholders. All other questions concerning the construction, validity
and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the internal laws of the State
of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(i) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES),
THE PARTIES DESIRE THAT THEIR DISPUTES
27
BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE
BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE
RELATIONSHIP ESTABLISHED AMONG THE PARTIES HEREUNDER.
(j) EXECUTIVE'S COOPERATION. During the Employment Period and
thereafter, Executive shall cooperate with the Company, Employer and their
respective Subsidiaries and Affiliates in any disputes with third parties,
internal investigation or administrative, regulatory or judicial proceeding
as reasonably requested by the Company (including, without limitation,
Executive being available to the Company upon reasonable notice for
interviews and factual investigations, appearing at the Company's request
to give testimony without requiring service of a subpoena or other legal
process, volunteering to the Company all pertinent information and turning
over to the Company all relevant documents which are or may come into
Executive's possession, all at times and on schedules that are reasonably
consistent with Executive's other permitted activities and commitments). In
the event the Company requires Executive's cooperation in accordance with
this paragraph after the Employment Period, the Company shall reimburse
Executive for reasonable travel expenses (including lodging and meals, upon
submission of receipts) and compensate Executive for his time at a rate
that is mutually agreeable to Executive and the Company.
(k) REMEDIES. Each of the parties to this Agreement (and the Investors
as third-party beneficiaries) will be entitled to enforce its rights under
this Agreement specifically, to recover damages and costs (including
attorney's fees) caused by any breach of any provision of this Agreement
and to exercise all other rights existing in its favor. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for
any breach of the provisions of this Agreement and that any party may in
its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or deposit) for specific performance
and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(l) AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company,
Employer, Executive and the Majority Holders (as defined in the Purchase
Agreement).
(m) INSURANCE. The Company, at its discretion, may apply for and
procure in its own name and for its own benefit life and/or disability
insurance on
28
Executive in any amount or amounts considered available. Executive agrees
to cooperate in any medical or other examination, supply any information,
and to execute and deliver any applications or other instruments in writing
as may be reasonably necessary to obtain and constitute such insurance.
Executive hereby represents that he has no reason to believe that his life
is not insurable at rates now prevailing for healthy men of his age.
(n) BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in
the state in which the Company's chief executive office is located, the
time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
(o) INDEMNIFICATION AND REIMBURSEMENT OF PAYMENTS ON BEHALF OF
EXECUTIVE. The Company and its Subsidiaries shall be entitled to deduct or
withhold from any amounts owing from the Company or any of its Subsidiaries
to Executive any federal, state, local or foreign withholding taxes, excise
taxes, or employment taxes ("TAXES") imposed with respect to Executive's
compensation or other payments from the Company or any of its Subsidiaries
or Executive's ownership interest in the Company, including, without
limitation, wages, bonuses, dividends, the receipt or exercise of equity
options and/or the receipt or vesting of restricted equity. In the event
the Company or any of its Subsidiaries does not make such deductions or
withholdings, Executive shall indemnify the Company and its Subsidiaries
for any amounts paid with respect to any such Taxes, together with any
interest, penalties and related expenses thereto.
(p) REASONABLE EXPENSES. Employer agrees to pay the reasonable fees
and expenses of Executive's counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement.
(q) TERMINATION. This Agreement (except for the provisions of SECTIONS
8(a) and (b)) shall survive a Separation and shall remain in full force and
effect after such Separation.
(r) ADJUSTMENTS OF NUMBERS. All numbers set forth herein that refer to
unit prices or amounts will be appropriately adjusted to reflect unit
splits, unit dividends, combinations of units and other recapitalizations
affecting the subject class of equity.
(s) DEEMED TRANSFER OF EXECUTIVE SECURITIES. If the Company (and/or
the Investors and/or any other Person acquiring securities) shall make
available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Executive Securities to be
repurchased in accordance with the provisions of this Agreement, then from
and after such time, the Person from whom such units are to be repurchased
shall no longer have any rights as a holder of such units (other than the
right to receive payment of such consideration in
29
accordance with this Agreement), and such units shall be deemed purchased
in accordance with the applicable provisions hereof and the Company (and/or
the Investors and/or any other Person acquiring securities) shall be deemed
the owner and holder of such units, whether or not the certificates
therefor have been delivered as required by this Agreement.
(t) RIGHTS GRANTED TO GTCR FUND VIII AND ITS AFFILIATES. Any rights
granted to GTCR Fund VIII, GTCR Fund VIII/B, GTCR Co-Invest and their
Affiliates hereunder may also be exercised (in whole or in part) by their
designees.
(u) SUBSIDIARY PUBLIC OFFERING. If, after consummation of a Subsidiary
Public Offering, the Company distributes securities of such Subsidiary to
members of the Company, then such securities will be treated in the same
manner as (but excluding any "preferred" features of the units with respect
to which they were distributed) the units with respect to which they were
distributed for purposes of SECTIONS 1(e), 2, 3, 4, 5, 6 and 7 hereof and,
in connection therewith, such Subsidiary may be treated as the Company for
purposes of the Company's rights with respect to such securities.
* * * * *
30
IN WITNESS WHEREOF, the parties hereto have executed this
Senior Management
Agreement on the date first written above.
MEDTECH/DENOREX, LLC
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title: Secretary
----------------------------------
MEDTECH/DENOREX MANAGEMENT,
INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------------
Title: Chief Financial Officer
----------------------------------
/s/ Xxxxxxx Xxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxx
Agreed and Accepted:
GTCR FUND VIII, L.P.
By: GTCR Partners VIII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR FUND VIII/B, L.P.
By: GTCR Partners VIII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
[MEDTECH/DENOREX: SIGNATURE PAGE TO
SENIOR MANAGEMENT AGREEMENT (XXXXXXX
XXXXXXX)]
GTCR CO-INVEST II, L.P.
By: GTCR Xxxxxx Xxxxxx XX, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR CAPITAL PARTNERS, L.P.
By: GTCR Mezzanine Partners, L.P.
Its: General Partner
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
TCW/CRESCENT MEZZANINE PARTNERS III, L.P.
TCW/CRESCENT MEZZANINE TRUST III
TCW/CRESCENT MEZZANINE PARTNERS III
NETHERLANDS, L.P.
By: TCW/Crescent Mezzanine
Management III, L.L.C.,
its Investment Manager
By: TCW Asset Management Company,
its Sub-Advisor
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Its: Managing Director
[MEDTECH/DENOREX: SIGNATURE PAGE TO
SENIOR MANAGEMENT AGREEMENT (XXXXXXX
XXXXXXX)]
EXHIBIT A
__________, 2004
PROTECTIVE ELECTION TO INCLUDE MEMBERSHIP
INTEREST IN GROSS INCOME PURSUANT TO
SECTION 83(b) OF THE INTERNAL REVENUE CODE
On March [__], 2004, the undersigned acquired a limited liability company
membership interest (the "MEMBERSHIP INTEREST") in Medtech/Denorex, LLC, a
Delaware limited liability company (the "COMPANY"), for $[________]. Pursuant to
the Operating Agreement of the Company, the undersigned is entitled to an
interest in Company capital exactly equal to the amount paid therefor and an
interest in Company profits.
Based on current Treasury Regulation Section 1.721-1(b), Proposed Treasury
Regulation Section 1.721-1(b)(1), and Revenue Procedures 93-27 and 2001-43, the
undersigned does not believe that issuance of the Membership Interest to the
undersigned is subject to the provisions of Section 83 of the Internal Revenue
Code (the "CODE"). In the event that the sale is so treated, however, the
undersigned desires to make an election to have the receipt of the Membership
Interest taxed under the provisions of Code Section 83(b) at the time the
undersigned acquired the Membership Interest.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Membership Interest, to report as taxable income for the calendar
year 2004 the excess (if any) of the value of the Membership Interest on
[_____], 2004 over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
[NAME]
[ADDRESS]
[SSN]
2. A description of the property with respect to which the election
is being made: A membership interest in the Company entitling the undersigned to
an interest in the Company's capital exactly equal to the amount paid therefor
and ___% of the Company's profits.
3. The date on which the Membership Interest was transferred:
[_____], 2004. The taxable year for which such election is made: 2004.
4. The restrictions to which the property is subject: If the
undersigned ceases to be employed by the Company or any of its subsidiaries, the
unvested portion of the units will be subject to repurchase by the Company at
the lower of cost or market value.
A-1
5. The fair market value on [_____], 2004 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions and in accordance with Revenue Procedure 93-27: $[AMOUNT PAID
OR TO BE PAID].
6. The amount paid or to be paid for such property: $[AMOUNT PAID OR
TO BE PAID]
* * * * *
A copy of this election is being furnished to the Company pursuant to
Treasury Regulation Section 1.83-2(e)(7). A copy of this election will be
submitted with the 2003 federal income tax return of the undersigned pursuant to
Treasury Regulation Section 1.83-2(c).
Dated: [_____], 2004
-------------------------------
[NAME]
A-2
EXHIBIT B
EBITDA
Fiscal Year Annual EBITDA
2004 $ 35,376,500
2005 $ 41,153,750
2006 $ 45,483,750
2007 $ 49,997,250
2008 $ 54,602,250
B-1
INVESTOR NOTICE SCHEDULE
IF TO GTCR FUND VIII, L.P., GTCR FUND VIII/B, L.P. OR GTCR CO-INVEST II, L.P.:
c/o GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, P.C. and Xxxxxxxxxxx X. Xxxxxx
IF TO GTCR CAPITAL PARTNERS:
GTCR Capital Partners, L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, P.C. and Xxxxxxxxxxx X. Xxxxxx
IF TO THE TCW/CRESCENT LENDERS AND/OR TCW/CRESCENT PURCHASERS:
TCW/Crescent Mezzanine Partners III, L.P.
TCW/Crescent Mezzanine Trust III
TCW/Crescent Mezzanine Partners III Netherlands, L.P.
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
WITH A COPY TO:
Gardere Xxxxx Xxxxxx LLP
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
